It has been estimated that between $6oo billion and $1.5 trillion
in funds is laundered around the world each year. Whatever the figure,
money laundering has been widely recognized as an enormous problem,
enough to prompt new efforts to crack down on it by law enforcement and
Congress. To that end, several experts recently appeared before the
House Committee on Government's Subcommittee on Criminal Justice,
Drug Policy, and Human Resources. They discussed trends in money
laundering, the state of anti-money laundering efforts, and proposed
legislation that would crack down on perpetrators of these schemes.

Kenneth Rijock, a former career money launderer for a narcotics trafficking organization, criticized law enforcement efforts as being
conducted by agents and officers without advanced degrees in finance and
law, and who generally never worked in a commercial business
setting." He called for enhanced training and long-term educational
requirements for these agents, including subsidies for postgraduate
degrees.

He also decried a system in which federal law enforcement agents
are routinely transferred to a new assignment just when they are
becoming proficient at their current job. He said that money launderers
exploit this system, moving money past junior, inexperienced officers
while senior officers are off duty. Thus, he argued, "Duty
assignments can no longer reward those with the most time in grade; we
need those people in the field during high-risk periods."

Deputy Assistant General Mary Lee Warren proposed other solutions,
including supporting H.R. 4695, the Money Laundering Act of 2000. She
pointed out that the bill would expand the list of crimes that serve as
the basis for money laundering prosecutions in cases where the proceeds
of foreign crimes by foreign criminals are concealed in the United
States. Currently, it is a crime to launder the proceeds categories of
foreign crimes in the United States: drug trafficking, bank fraud, and
violent crimes linked to terrorism.

New predicate offenses would include bribery of public officials
and arms trading, for instance. (Generally if the predicate offenses did
not occur in the United States, they are not punishable there.) Several
other sections of the bill would help prevent money laundering by
criminals who commit a crime in the United States and conceal the
proceeds abroad, she testified.

William F. Wechsler, Treasury special advisor to the Secretary and
Deputy Secretary, spoke in support of another legislative proposal, the
International Counter-Money Laundering and Foreign Anti-Corruption Act
of 2000 (H.R. 3886). That bill, which has already been passed by the
House Banking Committee, would authorize the Secretary of the Treasury
to designate a foreign jurisdiction, a foreign institution, or a class
of international transactions as being of "primary money laundering
concern."

Under that proposal, the secretary could impose targeted actions on
domestic financial institutions, such as additional record keeping and
reporting requirements or restriction of correspondent relationships
(relationships in which one financial institution provides services on
behalf of another) with money laundering havens and rogue foreign banks.

Warren and Wechsler also discussed trends in international money
laundering. Warren talked about the use of wire remittance businesses
and the Colombian Black Market Peso Exchange for laundering purposes.
Wechsler pointed out the positive actions of the Financial Action Task
Force, a 26-member organization dedicated to combating money laundering.
That organization recently identified a list of noncooperative countries
and territories, including the Bahamas, Israel, Panama, and Nauru.

Despite movement in the right direction, Wechsler warned that
advances in banking and communications technologies make it possible for
launderers to move money "farther and faster than ever
before." He said that nations that used to be too physically remote
to be involved in money laundering are now becoming havens because they
are a mere mouse click away from dirty money.

Also discussing trends was James F. Sloan, director of the
Financial Crimes Enforcement Network (FinCEN), one of the Department of
Treasury's lead agencies in the fight against money laundering. He
noted that large scale money laundering cases "almost universally
involve a wire transfer component by which millions of dollars in drug
and non-drug financial activity are camouflaged." Sloan also
observed that the tools of e-commerce are being exploited by money
launderers, ranging from fraud in online auctions to the establishment
of rogue financial services institutions.

Other witnesses included Edward M. Guillen, chief of financial
operations, Drug Enforcement Agency, and Raymond Baker, a senior fellow
at the Center for International Policy. All of the testimony is on
Security Management Online.

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